In business school, managerial economics is required course. On a macro level, economics explores and explains how a society as a whole manages resources; on a micro level economics is the study of how an individual or a firm can manage their resources most efficiently.
In my previous life, I undervalued the importance of the study of economics. My reason for undervaluing the concept was that I’m rich with great ideas, energy, and passion. I figured that if I set out on my own business venture, I would be solving a problem for my customers, and I would be solving the problem with such creativity and enthusiasm that I would have no problem achieving success. My assumption was idealistic, and relied on the notion that my customers would find me.
As I’ve matured since my undergrad degree, I’ve come to realize that the study of economics influences the majority of my day-to-day decisions. In the western world, our scarce resource is time, and monetary symbols are how we value time. The free market enterprise works in the western world, because we buy into the ideology that we have something to barter. For example, I may be willing to accept a job I hate if the compensation values my time as premium; alternatively, I may choose to work a lower paying job I love for the fun of it. In a free market economy, we as individuals have the ability to choose how we value our time.
In a utopian society, it would be plausible to assume that we could have all our basic needs, safety needs, social needs, esteem needs, and self actualization needs met by just doing what makes us happy. In actuality, the assumption is ridiculous as life is burdened with costs and expenses. In “real life” time is always scarce and expenses are always present.
What I believe to be the importance of the study of economics, is that economics teaches us to evaluate the cost/benefit trade-off. In every decision we make, we forego and alternative. These alternatives are classified as opportunity costs. If we constantly fail to recognize unique opportunities or to take risks, we risk loosing our ability to try.
In western society, we are blessed with the ability to choose what we value, and how we express value. I believe this truth, is a privilege not a right.